Project cost containment along with fast tracking procurements and contract change orders for the MTA is easier said than done due to other significant obstacles.
MTA union work rules sometimes prevent contracting out work to the private sector. Third party private contractors require MTA NYC Transit, Long Island and Metro North Rail Roads to provide both supervision and protection when they work on or adjacent to active right-of-way track. Sometimes there are excessive numbers of MTA supervisory or employees assigned, adding to costs.
“Buy America” requirements are one of many rules for receipt of federal funding. This impacts the MTA’s ability get the best bang for the buck, when spending $1.8 billion in direct annual federal formula grant funds and billions more in competitive discretionary, Capital Investment New Starts and Hurricane Sandy relief and resiliency dollars under the MTA’s $32 billion 2015 – 2019 and $51 billion 2020 – 2024 Five Year Capital Programs. The MTA has its own “Arts in Transit” 1% expenditure requirement. Gov. Hochul has the “New York Buy America Act” as well.
The FTA “Buy America” requirements continue to play a role in the ability of the MTA to both speed up capital projects and contain cost growth. Second is the Davis Bacon requirement of paying prevailing wages. Third is the U.S. Cargo preference requirement for private companies to use only American vessels when shipping product from abroad. Finally, prime contractors sometimes have problems finding qualified Disadvantaged Business Enterprise subcontractors with specialized skills to meet required federal and state civil rights goals.
Anyone in the transit industry knows that compliance with federal Buy America rules and regulations frequently adds both time and cost to a project. The $11.6 billion East Side Access to Grand Central Madison, $4.5 billion Second Avenue Subway Phase One, $7.7 billion Second Avenue Subway Phase 2 and $5.5 billion Brooklyn to Queens Light Rail Connector are good examples of how federal requirements add to costs.
How common is the past LIRR $11.6 billion East Side Access to Grand Central Madison incident of excessive phantom employees on the project payroll? The MTA seldom likes to acknowledge examples of waste, fraud and abuse. A simple audit was performed 13 years ago by an accountant who reviewed a budget for train platforms being constructed under Grant Central Terminal. The accountant found that funding was provided under the project budget to pay for 900 workers, but could only find paper work to justify 700 workers. No one on the project could explain what tasks their workers performed. These 200 potential phantom employees were paid $1,000 per day. They were subsequently removed from the payroll. No one ever determined how long they were on the payroll or how much they were paid. There is no evidence that these lost dollars were ever recovered.
The MTA has consistently failed to include more flexible work assignments in union contracts. The option to contract work to the private sector when feasible or hiring part-time employees must be more readily available as appropriate without sacrificing the safety and system reliability that riders count on. MTA employees need to increase contributions toward medical insurance and retirement pensions as other government, private sector employees, taxpayers and commuters do. Real reform for MTA employee pensions would be calculated based on the final year’s base and not inflated by overtime.
Unions that benefit by some of these rules and regulations make campaign contributions, endorsements, mailings, man phone banks and provide volunteers for “get out the vote” operations to candidates running for public office. Elected officials will seldom if ever take the side of commuters and taxpayers when it comes to supporting any reforms to the capital program.
Notice that at every ground-breaking ceremony for capital projects politicians always have a large contingent of union employees present. Elected officials always promise that they are delivering good union-paying jobs. They never talk about reform to work rules that might save the MTA money and time. Commuters, taxpayers, and transit advocates deserve better than the current status quo.
Mr. Marlin would make a great addition to the MTA Board in representing our interests.
Larry Penner is a transportation advocate, historian and writer who previously served as a former Director for the Federal Transit Administration Region 2 New York Office of Operations and Program Management.